“(12) Chevron have released a presentation for their investors … which indicates an expectation that 40% of the “new oil” will come from deepwater fields, 20% from U.S. shale, 10% from increased tar-sands production, 25% from OPEC growth (Venezuelan extra-heavy oil?), and around 5% each from shale outside of the U.S. (Russia?) and “onshore and shallow offshore”.

(13) Chevron also stress that production from these sources will not come cheap, and will probably be of the order of $100 a barrel (“Breakeven price” or “marginal cost”).

(14) Hence at under $50 a barrel selling price, these projects will not go ahead, or they will be money-losers (cost more to produce the oil than it sells for). This year, $150 billion worth of new projects may face the axe, which are mainly from heavy-oil, deepwater, tar-sands and shale-oil.”

I think this analysis looks sound as far as it goes, but it doesn’t address two big issues.

1. What OPEC might do next.

Although oil prices had fallen around 30 percent before the seismic November meeting in Vienna, the cartel is the reason behind much of the oil price crash. Will they regroup? Or is this the end of any and all caps on production, and might the oil price sink further.

2. Demand.

Talking about a market from only one side, as though demand was limitless, is as silly as assuming supply is limitless.

Peak oil appeals as a theory because it is self-evidently true. Oil really is non-renewable, and we use a lot of it. There will be a single day on which more non-renewable hydrocarbons are extracted from the earth than any day before or after. That day is the peak of production.

But – Peak oil is a hot topic, and despite debates about the accuracy of reserve estimation techniques, it’s not because of the physics of reserves. Peak oil matters because of the assumption it is going to be a problem.

Really, peak oil is not about oil. It’s about whether we can adapt. It’s about how we manage demand. That’s a question about the operation of markets, about the functioning of governments, about technology. About action guided by markets and action guided by collective planning. And that, in my opinion, is far more interesting.

The main assumption regarding demand is that oil consumption rises as the world grows richer.

But the relationship is not simple across countries, with very poor countries using very little energy and some rich countries using a lot

It’s possible to see the above curve as a Kuznets curve lying on its side. (I’ve written about Kuznets curves before in a very different context). Very poor countries and very advanced ones are more efficient. Middle income countries (and freezing cold Canada) are worst. If the most populous countries continue to develop, oil demand could shift.

2. Technology is crucial. Obviously, high prices drive the adoption of energy efficient practices, which is one reason why the Toyota Prius sold so well in the last ten years of high oil prices, and cars that get 13.3L/100km, like the one below, did not.

If oil prices stay low, that will be because those technologies – electric cars, solar power, biofuels – are having their effect. But oil prices will probably go back up ( in fact they already have bounced a little). If that happens, households and companies will regain motivation to adopt technologies to conserve usage, and we will probably be having these debates about when peak oil will occur in another hundred years.

3. Climate change. We may see peak oil happen long before we’ve used up half the world’s known reserves. Moving carbon from beneath the earth’s crust to its atmosphere produces externalities that could, any moment now, become so obvious that they drive a political consensus to leave the carbon beneath the surface, where it is relatively safe.